Day trading platforms are available for various financial assets, with rule-based systems being preferred. Direct access platforms offer deeper market insight, while futures and forex platforms provide advanced charting. Traders must understand the platform and have split-second execution, with low transaction costs being crucial. Education and practice are recommended.
There are specialized day trading platforms available for almost all tradable financial assets. Many brokers provide day trading platforms at no cost to the trader. Third party applications provide advanced day trading techniques. Traders who specialize in stocks, futures or forex have a large selection of platforms to choose from.
Day trading platforms are closely tied to the selected trading system. Rule-based trading systems are generally a better choice than discretionary trading. Advisory software platforms implement a wide range of trading tools such as scanners and indicators. Automated platforms use rule-based trading signals to execute buy and sell orders. Technical analysis is the foundation for most day trading platforms.
Direct access platforms allow the stock trader to deal directly with the market maker, specialist or Electronic Communications Network (ECN). Level two quotes give the trader deeper insight into market activity and discovery of the best bid/ask prices. Trades are executed in a fraction of a second. Some brokers offer steep discounts on commissions and brokerage fees, depending on your trading volume. Reducing transaction costs is crucial for the day trader.
Futures trading platforms are available for exchange traded derivatives. Online futures brokers offer 24-hour trading and an assortment of trading platforms. Most futures brokers offer a choice between their own proprietary day trading platform or a number of third-party vendor platforms. Many include live streaming quotes on electronic futures and options. Market depth and advanced charting are also available on many platforms.
Advanced charting platforms are available at almost all forex brokers. The volatility in the currency markets makes forex a popular choice for day trading. Forex brokers offer free charting platforms loaded with advanced indicators and day trading tools. Many brokers offer the ability to trade directly from the chart. Split-second order entry is a common feature of forex platforms.
Before selecting a day trading platform, the investor must decide which financial instrument will be traded. Stocks, futures and forex are some of the choices available. Many brokers offer educational resources for day traders. The investor should have a thorough understanding of the software, systems and strategies available before entering the day trading arena. The day trader will be competing with professional traders and powerful computers.
Day trading platforms could have different features, some of which are absolutely necessary. The platform must have a top-notch data feed. A good system is useless with bad data. The trade execution system must be easy to use and split second execution is essential. Low transaction costs are needed for volume traders.
In addition to these requirements, the day trader must be thoroughly familiar with the platform. There is no time to rethink. If the platform is not fully automated, the trader’s response must be immediate and precise. Education and practice in using paper trading accounts could prove invaluable.
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